The Bank of Japan (BOJ) is lending the country's banks 1.22 trillion yen ($13bn; £8.7bn) in emergency cash.
The central bank's decision to provide unlimited loans is the latest measure taken by authorities to bolster Japan's shrinking economy.
The BOJ is trying alternative ways of encouraging bank lending, after cutting rates to just above zero last month.
Japan's economy, the world's second-largest, is in its first recession since 2001.
The BOJ will accept bonds and shorter-term debt, such as commercial paper, as collateral until the end of March in return for the ultra-cheap loans, on which it will charge 0.1% interest.
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BBC NEWS | Business | Japan lending more cash to banks
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